Amazon has been blamed or praised – depending on your perspective – for Seattle’s historic real estate boom.
“Everyone has looked at Amazon as the harbinger” of the city’s record growth, said developer Jake McKinstry, a principal with Spectrum Development Solutions. “People have really banked on that.”
It’s easy to see why:
- The surge of well-paid Amazon employees rushing in from across the world has coincided with Seattle becoming the nation’s hottest homebuying market, with prices rising faster here than anywhere else in the country.
- As rent increases here outpace most every other U.S. city, Seattle is opening a record 9,000 new apartments this year – but Amazon alone has nearly 6,500 job openings in the city, far and away the most in the region.
- And at times, the company in recent years has taken more new office space than every other company in the city combined, helping Seattle become the crane capital of America and a near-constant construction site.
But now that the company plans to open a second, “equal” headquarters somewhere else, what does that mean for Seattle’s housing prices, rents and development boom?
In the short term, it probably won’t have much impact. Amazon already has committed to occupying 12 million square feet of office space in the city by 2022, and only two-thirds of that campus is complete.
To put that in perspective, the extra 4 million square feet of space Amazon still needs to move into is, by itself, at least four times bigger than the footprint for any other private employer in the city. Some of the new offices, apartments and shops coinciding with that expansion haven’t even begun construction yet.
But in the long run, real-estate analysts say, Amazon topping out here and growing elsewhere could slow bidding wars for homes as well as the influx of newcomers driving up rents.
And the developers planning office and apartment towers are likely to rethink their “build, build, build” mentality for projects they’re dreaming up now, especially around South Lake Union and the greater downtown region.
“This is probably welcome news for the housing market in Seattle, both on the for-sale side and the rental side,” said Svenja Gudell, chief economist for Seattle-based Zillow. “Not to say that Amazon is a full driver to those (housing price) increases, but they’re certainly contributing.”
At the same time, she cautioned that Amazon’s announcement doesn’t mean Seattle will suddenly return to its affordable status of yesteryear – more likely, prices will grow more slowly: “This is not writing on the wall that Seattle’s growth is over.”
Eric Shull, a Seattle managing broker with John L. Scott Real Estate, estimated about 10 to 20 percent of Seattle homebuyers are Amazon employees.
And his colleague Barry Matheny, who handles relocation services for the brokerage, said the number of Amazon renters is even larger.
“You’ll have a certain percentage of people who will relocate” to the second headquarters, Matheny said. “That opens up inventory. It’ll open up possibilities for people to buy homes.”
But neither Matheny nor Shull expect Thursday’s announcement to suddenly bring about a sea change in the housing market.
“It’s just different degrees of hotness,” Shull said. Even if demand drops off, the city still has an inventory shortage that is also driving up prices. “We just don’t have enough houses.”
The clearest impact will probably be on development, which continues to accelerate to record levels. Many of the new offices and apartments springing up across town are reliant on Amazon’s constant growth, and there is no company able to replace that demand, developers say.
Amazon now has more prime office space in Seattle than the next 40 biggest employers combined. It has more local job openings than all of the other region’s major employers combined.
“They are a unicorn in that respect,” said developer McKinstry.
“If they do slow down or stop their growth in Seattle, I do think it will cause the (development) market to look at Seattle a little more skeptically and pause,” he said.
He said he’s concerned about a potential luxury-apartment bubble; those units require a constant influx of well-paid newcomers to fill them.
Local developer Kevin Daniels added: “It probably signals the end to this cycle of office growth in our region from an international investor viewpoint.” Foreign interests have pumped billions of dollars into the development boom in recent years and in some cases, overseas developers have directly built projects here, partially on the strength of Amazon’s growth.
Then there’s the office market, which is likely to face headwinds, said Matthew Gardner, chief economist for Windermere Real Estate.
“They’ve been juicing the market there for several years. That is likely to start tapering,” he said. “But are we likely to see a contraction? I don’t see that happening at all.”
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